An Introduction to IP Considerations for Technology-Based Business Ventures

Introduction

Inventors are often unaware of the potential variety of IP rights they could obtain to protect their technology, particularly design rights and how they can complement patents. This paper aims to assist new and developing businesses, by exploring key points in connection with patent and design protection, and suggests strategies for developing and managing an IP portfolio that can be used to protect and grow a business.

Overall Strategy

A strong IP portfolio has a mix of rights. Whilst it is possible for one patent to be critical to a particular technology, strong protection is more often achieved through several rights, perhaps of different types.

For example, potential competitors will consider their position carefully if a product is protected by both patents, directed to different technical features, and registered designs directed to aspects of the product‟s appearance. A strong IP portfolio discourages competitors from producing a competing product, or encourages them to seek licences.

Therefore, it is important to constantly review any technological or aesthetic developments of a product and to consider whether further IP protection can be obtained.

Secrecy 

An important consideration in obtaining patent or registered design protection is the avoidance of self-anticipation. The subject-matter of a patent or registered design must at least be new compared to what is publicly available before the application is filed. As such, inventors should recognise that their own pre-filing disclosures could be detrimental to obtaining a granted right.

Although some territories provide 'grace periods' prior to the filing of an application, in which certain disclosures can be ignored, these vary around the world. Therefore, an entrepreneur with international ambitions for their business is well advised to file patent or design applications before disclosing their idea to the public.

In practice, it is often necessary to discuss an idea with investors or business partners before deciding to file an application. Such discussions can be conducted confidentially (with or without a non-disclosure agreement) without jeopardising a subsequent application, as long as that confidentiality is observed.

Patents 

Patents are the best known form of protection for technological innovations. Some fields are excluded from protection, but this varies according to country. It should not be assumed that patent protection is unavailable without consulting a patent attorney, who can provide specific advice for your situation. 

For example, in Europe it is commonly mistakenly assumed that protection cannot be obtained for a computer program. However, provided (as for all applications) there is technical innovation associated with the invention, patent protection can often be obtained. The computer program exclusion only really becomes problematic when the underlying innovation is itself in an excluded area (such as a business method or a method of playing a game), rather than being technical in nature. In these cases a patent attorney may still be able to advise you of an appropriate strategy to optimise your rights. 

Timing of Filing an Application

For engineering and IT inventions, if it is clear how an idea would be put into practice, it is often possible to file a patent application before the invention has actually been implemented. For chemical or biotechnological inventions, it is usually necessary to have experimental data supporting an invention before an application is ready for filing.

In either case, an application should be filed as early as possible (once sufficient information is available) to minimise the prior art that can be cited against the application. To get the right information for your specific case, discuss this issue with your patent attorney.

Choosing Countries in which to Obtain Protection

It is a business reality that patent protection can be expensive if international protection is required. However, delays in the patent timeline can be exploited to ensure that costs are not incurred unnecessarily.

Filing a first patent application starts a one-year term in which corresponding applications may be filed in other countries and be treated as filed on the same date as the first application. This is known as claiming 'priority'.

A common strategy is to use the priority year to assess whether the invention is commercially viable. Meanwhile, the application's strength can be assessed using the results of a search performed by the patent office at which the application was filed.

Towards the end of the priority year, it can then be decided whether to continue with the application or whether it should be abandoned. If further applications are to be filed, the PCT (Patent Cooperation Treaty) system can be used to further postpone the costs of a wide-ranging filing strategy, and the final decision as to which countries to pursue protection in. Your patent attorney can discuss this in more detail with you. 

Another consideration, when choosing countries to pursue protection in, can be whether a patent will provide any secondary advantages.  For example, in the UK, the recently announced “Patent Box” provisions will provide tax benefits from 2013 that may more than compensate the cost of obtaining a UK patent. Many UK patents being filed now may provide this substantial tax benefit.

Design Protection 

Design protection is less well known than patent protection, but can be a valuable part of an IP portfolio. Design protection can be 'registered', meaning an application must be filed, or 'unregistered' meaning protection is automatic if certain criteria are fulfilled. Unregistered design protection has similarities to copyright, requiring proof of actual copying to show infringement.

Designs provide protection for an article's appearance. The look of a product can be critical to its success, irrespective of the underlying technology. As such design protection can be an integral part of an IP portfolio.

An advantage of registered designs is that they are typically much cheaper than patent applications, and are granted more quickly. It is not uncommon for design protection to be ten times cheaper than patent protection in a given jurisdiction, with the time until a granted right is issued being much more than ten times shorter. This can make it a highly desirable first right to obtain for a start-up company with plans to release a series of products. 

The speed and cost differential relative to a patent is often due to a lack of examination of the validity of a design before it is granted. In that case, the design's validity is only tested when the right is enforced. It might seem that the uncertainty of the validity is a disadvantage to the right-holder.  A similar criticism could be that it is difficult to establish the scope of protection offered by a registered design. However, any uncertainty is often advantageous to the right-holder because potential infringers are also faced with the same legal ambiguity. As such, registered designs can be a useful tool in discouraging competitors or when negotiating licences. Furthermore, securing any form of registered rights for your development may assist in securing vital investment.

Trade Marks

Trade marks are often overlooked when developing a new technology. However, trade marks are an important way to extend an IP portfolio and protect an invention. Furthermore, trade marks have the advantage that they offer a right that does not expire (in contrast to patents and designs, which have a limited lifetime). In particular, the development of a strong brand and associated marks whilst a product is covered by patent protection can build brand and product loyalty.  Such loyalty can be exploited to maintain market dominance even after patent protection expires.

It is recommended to seek advice regarding trade marks as soon as any desired brand names and logos are being considered and before resources are committed to developing the brand identity. In particular, it is desirable to seek advice regarding whether you will be free to use a particular mark and whether there may be particular issues with obtaining trade mark protection to prevent others from using the mark or a similar mark.

Freedom to Operate Searches

A common misconception is that ownership of IP associated with a product gives an automatic right to make and sell that product. However, patents and registered designs are best viewed as 'negative' rights, which allow the owner to prevent other parties from using the invention or design. They do not provide an automatic right to perform the invention or use the design.

It is possible for pre-existing patents to be infringed by a new product, even if that product embodies a new invention covered by a new patent. In that case, it is necessary to seek licences to the pre-existing patents before the new product can be manufactured and sold. As such, licences to third party rights can form an equally valuable part of an IP portfolio as IP that is directly owned, as they permit a licensee to continue their business. Alternatively, the new product can be adapted to avoid falling within the scope of the prior patents.

It is normal for an inventor to be unaware of pre-existing rights. However, it is possible to perform a 'freedom to operate' search of existing rights, to find those that are potentially relevant.

Such searches should be integral to any technology strategy, to avoid unexpected allegations of infringement of other parties' rights. Continuous searches can be implemented, to find applications as they are published and so ensure that an inventor is always as well informed as possible about his competitors' IP position. Such information can also be helpful when seeking investors, who will want to know as much as possible about the IP landscape in which their potential investment will exist.

Summary

When managing an IP portfolio, a variety of rights provides the best protection for a growing business. In order to develop a strong portfolio, it is important to continuously evaluate not only new products, but changes to existing products and changes to manufacturing methods to ensure that all your innovations are well protected. 

15 May 2012

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